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Crisis or new economic and social (II)

Some conclusions

As mentioned, there is one or more root causes of the economic system that produces variable effects over time and the nature of which we know little. We know the measurable effects such as "growth", "unemployment" "Inflation", "liquidity", "evolution of stock market indices", "price of money", "GDP", etc.

If we know the cause does not apply a correct medicine. We do not know if this is a special case (in Deming's terminology) or a natural cause of the system. The type of solution is completely different in one case and in the other.

For readability reasons we will call short-term (special) or structural causes (natural system). The first can be managed with specific actions but the latter can only be optimized by directly on the economic system.

interacting elements are many and they are all interconnected. The very consciousness of "crisis" is a basic factor in this set. We face a real complex system consisting of subsystems and those of actors (individuals, corporations, governments and financial).

Some relationships are known, thus lowering the price of money occurs, at least, postponed a CPI increase over time. Central banks (such as the ECB and the Fed) use this mechanism to reduce inflation when it is triggered and vice versa. But any action has an effect on the remaining elements system, with times and different magnitudes and not calculated.

The central banks' actions would be reasonable if it were to cyclical factors, but on the contrary would aggravate the variability of the system if it were natural and structural causes. These require other solutions.

know that there is a stable point and that the different levers used by central banks, such as changing the price of money or liquidity, leading inevitably to produce the opposite effect. Deming shows that this is the effect that occurs when one is artificially adjusting a system that has a natural variability: increases variability of their results as the CPI, so that this mistake every time we need more central bank action, getting worse the problem. The ECB is more sensible for the Fed to have kept the CPI stable at 1%, while the Fed has not stopped moving below and above.

But we're talking about a complex system and as such must have two things: relationships between its components and a common purpose. Yes?. Well I am not aware. There are many conflicting purposes both geographic and system components. Geographic because there are three major centers that use his leverage with the intention of benefiting to its components: the ECB, the Fed and Asia. Not functional because I know that the interests of the financial system matches the user's financial system: businesses and citizens. And governments with interests in turn limited by time between elections.

We as two previous findings:

1 .- The causes, which are often managed and supervised by central banks, have a structural origin (natural variations in the system.)

stocks managed by the central banks would be appropriate to cyclical factors, then you are not applying the correct solution.

2 .-

economic system has no global common purpose clear, but multiple geographical purposes (number of central banks) and actors (individuals, corporations, governments and financial).